Is The Hype Over Google AdWords Quality Score Justified?

The focus of the paid search world, if you measure it by tweets, blog posts and conference sessions, has turned squarely to Google’s AdWords Quality Score over the past few months.

Google first introduced Quality Score years ago, but changes they rolled out in August of 2008 recently increased visibility of the score in the AdWords interface and via their API, and a great new video by Google Chief Economist Hal Varian has pushed the discussion to a fever pitch.

Part of the appeal clearly is the fact that it’s a numeric value judgement Google is making about our keywords and account configuration. Like PageRank before it, as a search community we’ve proven the ability to go slightly bonkers about Google numbers that indicate and/or drive our success.

But just how important is Quality Score, and how significantly should it factor into the way PPC campaigns are managed?

It turns out Quality Score actually is a big deal, one that you ignore at your own risk and expense. The reason boils down to its inclusion in two formulas that Google uses to determine where (and if) your ads appear and how much you pay for clicks.

The first is the formula for Ad Rank. This is the math that decides which ads appear in the top slot, which sit in position #2, and so on all the way down to the point at which ads don’t get shown at all. The formula is:

Ad Rank = MaxCPC x Quality Score

Right there we see the importance of Quality Score. It’s equally as important as your bid in terms of when and where your ads are positioned. It’s the sweat-equity of PPC. A chance to out-gun the big spenders with your wit, savvy, charm and hard work.

If two competitors have similar or equal bids, obviously the higher Quality Score will earn a higher position.

And since there are often more advertisers than available display slots, the Ad Rank impact of Quality Score in many cases is the difference between an displaying and not displaying at all.

A discount card or a tax?

After Quality Score is used to determine the position of your ad, it is used again to calculate how much you’ll pay for each click.

The formula for your CPC on any keyword is based on the Ad Rank of the advertiser who scored just below you and your Quality Score.

Actual CPC = (Ad Rank just below yours ÷ Quality Score) + $0.01

Using the previous example, our Ad Rank was 40 while our competitors’ Ad Rank was 30. Our cost-per-click is then calculated as 30/20 + $0.01 or $1.51.

For every point (or fraction of a point) our Quality Score goes up, our cost-per-click goes down. And each rise in our Quality Score literally costs us less money on every click.

Assuming that the average Quality Score is 7 (which is our experience), earning a Quality Score of 10 is like getting a 30% discount. If your Quality Score is 5, then you’re paying a 40% per-click premium.

These are quite approximate values, because the numbers Google reports to us as Quality Scores aren’t the actual numbers they use in their calculations. We can assume they have much more precision than they share, and their numbers may or may not be exactly proportional to those they show us.

Click-through-rate drives Quality Score

There is no doubt Quality Score plays a critical role in your success with the keywords you buy. That part of the ‘hype’ is real.

But there is a challenge in sorting out all the claims of what to do about it. Google has listed the elements considered in their Quality Score calculation, but they have not precisely defined the role of each in their calculations.

As Google’s Dr. Varian says in his video, click-through-rate (CTR) is the largest component of the Quality Score calculation. Get a better CTR than your competitors and you should get a better Quality Score.

The CTR on the specific keyword is most important, but CTR is also tracked for each target URL and for the entire account—which means earning a high CTR for one keyword can have a broad positive effect.

The most direct and effective way to improve your CTR is by writing better text ads, and testing them to prove they’re better. Narrowing the breadth of keywords in any ad group so that all the queries those keywords attract are well suited to the text ads the ad group contains is also a very reasonable strategy.

Note that a great CTR from one keyword may be a lousy CTR for another. I don’t believe there are any absolutes so you can’t tell how good your click-through-rate is without knowing those of your competitors. You just have to strive for the best you can achieve.

Google has made clear that Quality Score is computed in real time and takes into account the search query and geography of the searcher. So if you get great CTR from New York and lousy CTR from Kansas, your Quality Scores should react accordingly.

Speaking at SMX West, Nicholas Fox, Director of Product Management at Google characterized the focus on CTR as the primary driver of Quality Score as relying on the “wisdom of crowds”—if lots of people “tell” Google that an ad is “high quality” by clicking on it, then Google believes it’s a high quality ad.

The non-CTR factors

It is my belief that most of the other Quality Score factors—including all the forms of relevance and the landing page items—are only seriously meaningful before a particular keyword has a well established CTR track record. In other words, Google use these factors to provide clues about the potential performance of a keyword that hasn’t yet proven itself. But once it has, they’ll go with the actual results.

The one exception is that landing pages which are deceptive, entirely unrelated, extremely slow or have other shady characteristics can lead to what is in effect a Quality Score penalty. Conversely, reasonably relevant and generally standard or even hyper-optimized landing pages can’t help Quality Score. In fact, Google has confirmed that landing page quality is not a factor when Quality Score is used in the Ad-Rank formula.

In my view the bloggers and tweeters out there who suggest that every keyword must be in the text ad and on the landing page, or that super-narrow ad groups, or any other non-CTR “secrets” are the way to achieve high Quality Score are mistaken. Like the SEO “keyword density” crowd of yesteryear, they’re reading more into the tea leaves that is there to be read.

Life in a Quality Score world

It wasn’t long ago that paid search managers could afford to ignore Quality Score in AdWords. Not Anymore. Today your low Quality Score keywords are lowering your volume and ROI, and your high Quality Score keywords are boosting your results.

You can monitor the Quality Score of your keywords easily in the new AdWords interface, and in a few of the better paid search management tools.